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The World Bank warning comes amid heightened fears about the eurozone debt crisis spreading to the region's bigger economies such as Spain and Italy. The borrowing costs for these nations have risen significantly, raising concerns about their ability to replay their debts. On Tuesday, the benchmark 10-year bond yield for Spain hit 6.81%, the highest rate since the launch of the euro in 1999. Meanwhile, Italy's 10-year bond yield rose to 6.28%, a rate not seen since January this year.

This followed a 100bn-euro ($125bn; £80bn) bailout of Spanish banks over the weekend. There are fears that as the crisis escalates it will hurt investor sentiment in Europe and dent demand. That does not bode well for developing economies, especially in Asia, which rely heavily on demand from the eurozone for their exports. "The problems are serious and developing countries should reckon with a long period of low growth in Europe," said Mr Timmer. Mr Timmer added that there was possibility of "a further crisis in Europe" and that developing nations should prepare themselves for any such scenario.

Source URL: http://www.bbc.co.uk/news/business-18419643
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